Key types of business insurance every company should have

Comprehending the various types of insurance coverage available for your business is essential for safeguarding your operations against risks. From general liability to property insurance, choosing the right policies ensures peace of mind. Additionally, if your business requires frequent travel, consider obtaining travel insurance online to protect against unexpected disruptions or emergencies. Below, we’ll walk you through ten key types of insurance to consider, outlining what they cover and how they can help protect your business.

1. General liability insurance

Think of general liability insurance as your business’s safety net for unexpected incidents. It protects against third-party claims for bodily injury or property damage. For instance, if a customer is injured after slipping at your place of business, general liability insurance can cover the claim. However, keep in mind that this type of insurance does not cover damage to your own property.

2. Property insurance

Property insurance steps in when your business faces damage from events like fires, hurricanes, tornadoes, or even vandalism. Whether it’s your building, equipment, or other assets, this insurance helps you recover after unforeseen disasters.

3. Fidelity insurance

Fidelity insurance offers protection against losses caused by criminal acts, both internal and external. It covers scenarios like theft, fraud, forgery, robbery, and embezzlement—whether committed by employees, managers, or third parties — helping to reduce your business’s exposure to these risks.

4. Workers’ compensation insurance

Workers’ compensation insurance ensures that employees who are injured on the job receive medical benefits and wage replacements. In states like North Carolina, businesses with three or more employees are required to carry this insurance. It’s essential for protecting both your employees and your business.

5. Directors and officers (D&O) liability insurance

D&O insurance protects your leadership team from personal financial losses resulting from lawsuits tied to decisions they make on behalf of the company. It can cover defense costs, settlements, and more. When choosing a policy, consider coverage for past, present, and future directors, as well as protection against claims like wrongful termination, discrimination, and failure to procure proper insurance.

6. Cyber insurance

In today’s digital world, cyber insurance is crucial for shielding your business from the financial fallout of data breaches or cyberattacks. Coverage typically includes expenses like forensic investigations, legal fees, customer notification, regulatory fines, and even business interruption losses. It can also help with public relations and crisis management to rebuild customer trust.

7. Umbrella insurance

Umbrella insurance provides an additional layer of liability protection, kicking in when the limits of your primary policies — such as general liability, auto, or workers’ compensation — are exceeded. This extra coverage is invaluable in high-stakes situations, like a significant lawsuit or a major accident, preventing your business from shouldering the excess costs.

8. Representation and warranty insurance

During mergers, acquisitions, or other major transactions, representation and warranty insurance can protect your business against financial losses from breaches of promises or guarantees made during the deal. Depending on the size of the transaction, this coverage can offer peace of mind in vulnerable transitions.

9. Tail coverage

Tail coverage extends your insurance protection beyond the expiration of a policy. This is particularly useful during business transitions, such as mergers or leadership changes, ensuring you remain covered for claims filed after the policy period ends, especially if the statute of limitations extends beyond the sale of your company.

10. Commercial auto and non-owned & hired vehicle coverage

Commercial auto insurance covers company-owned vehicles, protecting against expenses related to accidents, medical costs, and uninsured motorists. However, it doesn’t cover vehicles your business doesn’t own, like rented cars or employee-owned vehicles used for work purposes. To address this gap, non-owned and hired auto insurance offers additional coverage for these situations.

By understanding and evaluating these insurance options, you can create a tailored risk management strategy to protect your business from the unexpected and keep operations running smoothly.